While much has already been written about the Corporate Transparency Act of 2021 (“CTA”) – under which the vast majority of companies and other entities will have a reporting requirement at some time in 2024 – not a lot has been published regarding the actual mechanisms through which those reports will be made.
The Role of FinCEN Identifiers
This month, however, the Financial Crimes Enforcement Network (FinCEN), announced and elaborated on the use and availability of FinCEN identifiers. Under this new guidance, FinCEN identifiers may be crucial for business owners, particularly for those managing multiple entities. A FinCEN identifier is a unique number assigned by FinCEN to individuals and reporting companies, streamlining the reporting process under the CTA.
Simplifying Reporting for Individuals
Individuals can apply for a FinCEN identifier, providing all necessary information required in the initial report. Once an individual obtains this identifier, they can then provide it to any reporting company. The reporting company, in turn, can use this identifier number in their reports instead of the detailed information otherwise required, making the process more efficient.
A critical aspect of maintaining a FinCEN identifier is the obligation of the individual to keep information current. If there’s any change in the information provided by an individual for their FinCEN identifier, they must submit an updated application within 30 calendar days of the change. Similarly, if initial information was inaccurate, a corrected application is required within 30 days of becoming aware of the inaccuracy.
For serial entrepreneurs and those overseeing multiple business entities, obtaining a FinCEN identifier is a strategic move to streamline the reporting process under the Corporate Transparency Act. For reporting companies, requiring beneficial owners to obtain, report, and maintain their own FinCEN identifier number could be part of a policy to shift the reporting obligation to the beneficial owner when their information changes.
You can learn more about FinCEN identifiers pursuant to the final rule FinCEN recently published on the topic. The identifier process not only simplifies compliance but also ensures that all required information is accurately and efficiently communicated to FinCEN. If you have any questions, or require assistance, please contact Fraser Trebilcock attorney Bob Burgee.
This alert serves as a general summary and does not constitute legal guidance. Please contact us with any specific questions.
Robert D. Burgee is an attorney at Fraser Trebilcock with over a decade of experience counseling clients with a focus on corporate structures and compliance, licensing, contracts, regulatory compliance, mergers and acquisitions, and a host of other matters related to the operation of small and medium-sized businesses and non-profits. You can reach him at 517.377.0848 or at firstname.lastname@example.org.